IA 1 - R&D (CHAP 35) Flashcards
How should research and development cost be accounted for?
a. Capitalized and amortized over the useful life.
b. Expensed when incurred.
c. May be either capitalized or expensed when incurred depending upon materiality.
d. Expensed when incurred unless with alternative future use or unless contractually reimbursable.
d. Expensed when incurred unless with alternative future use or unless contractually reimbursable.
Which would be considered research and development?
a. Routine effort to refine an existing product
b. Periodic alteration to existing production line
c. Marketing research to promote a new product
d. Construction of prototype
d. Construction of prototype
Which of the following costs should not be capitalized?
a. Acquisition cost of equipment to be used on current and future research projects
b. Engineering cost incurred to advance the product to the full production stage
c. Cost incurred to file for patent
d. Cost of testing prototype before economic feasibility has been demonstrated
d. Cost of testing prototype before economic feasibility has been demonstrated
Which is not research and development activity?
a. Adaptation of an existing capability to a particular requirement or customer need
b. Application of research finding for a new product
c. Laboratory research aimed at new knowledge
d. Conceptual formulation of product alternative
a. Adaptation of an existing capability to a particular requirement or customer need
Which statement is true about development cost?
a. Development cost must be expensed.
b. Development cost is always deferred and expensed against future revenue.
c. Development cost may be capitalized as an intangible asset in very restrictive situations.
d. Development cost must be capitalized.
c. Development cost may be capitalized as an intangible asset in very restrictive situations.
Which research and development costs should be capitalized and amortized over current and future periods?
a. Research and development laboratory building
b. Inventory used for a specific research project
c. Administrative salaries allocated to research
d. Research findings purchased from another entity to aid a particular research project currently in process
a. Research and development laboratory building
The cost of research and development laboratory building is matched against earnings as
a. Research and development expense.
b. Depreciation deducted as part of research and development expense.
c. Depreciation depending on accounting policy.
d. An expense when productive research has been obtained.
b. Depreciation deducted as part of research and development expense.
A research and development activity for which the cost would be expensed as incurred is
a. Design, construction and testing of preproduction prototype and model
b. Quality control during commercial production
c. Periodic design change to existing product
d. Adaptation of an existing capability to a particular requirement or customer need
a. Design, construction and testing of preproduction prototype and model
Which is a research and development cost?
a. Research and development performed for others
b. Development or improvement of technique and process
c. Offshore oil exploration as the primary activity
d. Market research related to a major product
b. Development or improvement of technique and process
An activity that would be expensed currently as research and development costs is
a. Engineering follow-through in an early phase of commercial production
b. Legal work in connection with patent application and the licensing of patent
c. Testing in search for or evaluation of product or process alternative
d. Routine on-going effort to enrich or improve quality of existing product
c. Testing in search for or evaluation of product or process alternative
